RIYADH: Open banking services in Saudi Arabia are set for a boost after the Kingdom’s central bank announced the launch of a new lab to allow businesses to test out their products against an established framework.
The service is a new concept that enables the consumers of financial institutions to securely share their data with a third-party provider, facilitating new and innovative services and products for consumers.
The announcement by the bank, also known as SAMA, comes in the wake of its Open Banking Framework issued in November 2022, and is aimed at aiding innovation and accelerating development in the sector.
“The lab will provide banks and fintechs with a technical testing environment to enable them to develop, test and certify their open banking services to ensure compatibility with the Open Banking Framework,” the central bank said in the statement, adding: “It will create a positive impact in the industry by strengthening the partnership between banks and fintechs, improving the financial infrastructure to guarantee better use of consumers’ financial data.”
Launched in November, the Open Banking Framework includes a comprehensive set of legislation, regulatory guidelines and technical standards based on international best practices to support banks and fintechs in the Kingdom.
The first version focused on account information services, and the second will concentrate on the payment initiation service.
The implementation of open banking services is one of the initiatives of the Fintech Strategy, one of the pillars of the Financial Sector Development Program under Saudi Vision 2030.
The Fintech Strategy was approved by the Council of Ministers in May 2022 and aimed to make the Kingdom a global fintech hub where technology-based innovation in financial services is the foundation to enhance individuals’ economic empowerment and society.
Saudi Central Bank is tracking the development of banks and fintechs to ensure their readiness to launch open banking services within the first quarter of 2023.
According to the recent Fintech Saudi Annual Report, the year 2022 saw a 79 percent increase in the number of active fintech companies to 147 from 82 in 2021. The industry also grew 14.5 times in the last four years.
The report revealed that 79 percent of these companies were based in Riyadh, while the rest were headquartered overseas.